Appointing the Median Voter of a Policy Board
Partisan politics and elector uncertainty generate policy uncertainty and partisan business cycles. To reduce policy uncertainty, society must design the policy-making environment to overcome electoral uncertainty and partisanship without ignoring the electorate’s wishes. I show that delegating policy to an independent policy board with discretionary powers substantially reduces policy uncertainty while maintaining political accountability. Board members are chosen in a partisan, noncooperative environment yet, in the benchmark model, policy uncertainty is eliminated and the policy rule is replicated. Thus, a political “invisible hand” is at work—by setting up the policy institution properly and having the participants pursue their own self-interest, the social “optimum” prevails.
Waller, Christopher 1998. “Appointing the Median Voter of a Policy Board” Federal Reserve Bank of Cleveland, Working Paper No. 98-02. https://doi.org/10.26509/frbc-wp-199802